Top telco CEOs shut down the idea of establishing a mobile virtual network operator (MVNO) agreement with a satellite player, saying they do not see satellite broadband as meaningful competition to their businesses.
The CEOs of T-Mobile, Verizon, and AT&T addressed Low-Earth Orbit (LEO) competition and direct-to-device (D2D) prospects during their second quarter calls this week.
There’s been recent speculation of SpaceX striking an MVNO deal to become a hybrid satellite/terrestrial provider after analyst firm MoffettNathanson explored scenarios in a recent report, detailed by Light Reading. SpaceX’s S-1 filing says the company intends to “compete to be the preferred connectivity experience” in rural, suburban, and urban areas.
Verizon CEO Dan Schulman told investors Friday there is “no backdoor to our MVNOs in any structure.”
“We want to work with the satellite providers, primarily through the JV with T-Mobile and AT&T. But there is no reason that we can see to extend an MVNO to any satellite player, and there is no way that anyone can get access to our MVNOs as well,” Schulman said.
MVNOs like Mint Mobile and Cricket Wireless purchase network access in bulk from a major carrier and resell to their own customers.
Schulman referenced the joint venture announced in May between the three telcos to work together on direct-to-device, aimed at building a robust wholesale market for satellite D2D built around standardizing devices and spectrum-sharing.
AT&T CEO John Stankey was also asked if there is a scenario where AT&T would partner with SpaceX and Starlink in an MVNO agreement. Stankey said that satellite helps AT&T expand its reach to about 2% of traffic it can’t cover.
“I don’t necessarily need a wholesale arrangement to go and address that 2% of the traffic that I can’t get at today because I can get at 98% of the traffic,” Stankey said Wednesday. “I’m not prone to look for a wholesale agreement to solve a problem I don’t have.”
Stankey said he believes AT&T is building “the best converged product” in the direct-to-device space. He said the service with AST SpaceMobile will “come to fruition as we move into next year,” and be a seamless transition for customers.
“By the time we get into next year, we will have solved for that other 2%. We will be in the market doing what customers want — which is providing them the assurance that they can buy from one provider and always be on the internet. In that respect, we will be first in the market with that,” Stankey said.
T-Mobile CEO Srinivasan Gopalan also addressed the telco’s outlook toward partnering with satellite on both broadband and D2D, saying Thursday the company offers a “significantly better product” than fixed wireless access (FWA) or LEO, and is best used as a backup.
“The way we think about partnerships is it needs to bring incremental value to us. And that incremental value is typically in some sort of differentiation — either in terms of product or in terms of new channels or in terms of new customer bases,” Gopalan said. “Having worked closely with satellite over the last four years, we’re just not seeing that incremental differentiation.”
In terms of satellite D2D, Gopalan reiterated his view that that direct-to-device is a complimentary service and continues to be a small percentage of traffic on its network. “It’s clear that with time, this is no longer going to be a differentiation. It’s going to be table stakes as a complementary service to have satellite along with your cellular service,” he said.
Gopalan told investors T-Mobile’s exclusivity period with SpaceX’s Starlink for the T-Satellite D2D service does not end this year.
He said the telcos are “progressing rapidly” on an agreement for the joint venture, seeming to indicate that T-Mobile will primarily source satellite capacity through the joint venture in the future.
“The JV does allow for individual operators to have conversations and agreements with other parties. But our expectation is the vast majority [of satellite] will be sourced through the JV.”
In terms of broadband competition from LEO, Verizon CEO Schulman said he sees “no impact” from satellite providers on Verizon’s broadband penetration. “It is very difficult for satellite providers to provide a service that’s even close to what we can provide with our broadband services,” he said.
He estimated the total addressable market for satellite broadband in the U.S. to be between 6 million and 8 million homes, primarily in very rural geographies, where building a terrestrial network is cost-prohibitive.
